Toyo Tire : Financial Results for 2nd Quarter of FY2023 (Script text)

August 10, 2023

TOYO TIRE Corporation

Financial Results

for 2nd Quarter of FY2023

(Presentation scripts)

Page2: Highlights of Financial Results

Thank you for your continued support.

Allow me to explain our "Financial results for 2nd Quarter of FY2023," followed by our "Financial Forecast for FY2023" and then "Topics."

First, I will walk you through the Highlights of Financial Results for 2nd Quarter of FY2023.

Net sales hit the record high for the second quarter, driven mainly by growing sales of light truck tires in North America.

Operating income increased year-on-year, as we successfully coordinated our supply to flexibly respond to changes in demand, with the lowering of ocean freight cost and other external factors serving as a tailwind as well.

On the other hand, profit attributable to owners of parent decreased year- on-year, mainly due to a decrease in a gain on sales of securities.

Given the performance trends up to the end of the second quarter and the future outlook, we have revised our full-year forecasts for both operating income and profit attributable to owners of parent upward to 60.0 billion yen and 55.0 billion yen, respectively, from the previous full-year financial forecasts for FY2023 that we announced in February this year.

In accordance with these upward revisions of earnings forecasts, we have also revised our February forecast for the annual dividend per share upward to 78 yen.

Page3: Financial Results for 2nd Quarter of FY2023(Jan-Jun)

Here you see our financial results for 2nd Quarter of FY2023.

Net sales hit the record high for the second quarter of 265.5 billion yen. Operating income recorded a year-on-year increase as ocean freight cost lowered and the yen remained weak.

Ordinary income, too, recorded a year-on-year increase, mainly due to the increase in operating income.

Profit attributable to owners of parent decreased as a gain on sale of securities decreased and a loss on liquidation of subsidiaries and associates with respect to the Automotive Parts Business was posted under extraordinary losses.

Page4: Analysis of Operating Income for 2nd Quarter of FY2023(Jan-Jun) (vs 2022)

This graph shows the factors contributing to year-on-year changes in operating income for 2nd Quarter of FY2023.

For the Tire Business, sales factors pushed down operating income by 3.0 billion yen. The sum breaks down into 3.1 billion yen for volume effects and negative 6.0 billion yen for product price/mix effects, the latter of which includes negative 6.6 billion yen for unrealized profit in inventory.

Production cost pushed down operating income by 1.8 billion yen, primarily attributable to rising energy costs. Costs of raw materials and the Serbia plant start-up, too, lowered operating income by 3.0 billion yen and 2.1 billion yen, respectively.

Meanwhile, forex rate factors added 5.2 billion yen to operating income due to the ongoing depreciation of the yen, and ocean freight cost factors pushed up operating income by 7.1 billion yen due to price revisions.

As a result, operating income for 2nd Quarter of FY2023 increased by 0.7 billion yen year-on-year.

Page5: Analysis of Operating Income for 2nd Quarter of FY2023(Jan-Jun) (vs Previous Forecast)

This slide shows comparisons between the results and the previous forecast of operating income for 2nd Quarter of FY2023 announced last February, and the factors that caused the increases and decreases.

For the Tire Business, sales factors pushed down operating income from its previous forecast by 3.1 billion yen, primarily because the sales volume was lower than anticipated, although the effects of price hikes were greater than we expected.

The sum breaks down into negative 1.9 billion yen for volume effects and negative 1.2 billion yen for product price/mix effects, the latter of which includes negative 3.3 billion yen for unrealized profit in inventory.

SGA expenses, cost of raw materials, and ocean freight cost all turned out to be better than anticipated, and forex rate factors pushed up operating income from its previous forecast by 3.5 billion yen due to the ongoing depreciation of the yen.

As a result, operating income for 2nd Quarter of FY2023 was 8.7 billion yen higher than its previous forecast to reach 26.7 billion yen.

Page6: Business Segments for 2nd Quarter of FY2023(Jan-Jun)

Shown on this slide are net sales and operating income for 2nd Quarter of FY2023 by business segment.

The Tire Business recorded year-on-year sales growth due to increased sales in North America and elsewhere, but operating income remained flat year- on-year primarily owing to the change in the product mix.

For the Automotive Parts Business, net sales increased and operating loss shrank.

Page7: Geographic Area Segments for 2nd Quarter of FY2023(Jan-Jun)

Here we have our net sales and operating income for 2nd Quarter of FY2023 by geographic area segment.

The North America Segment recorded year-on-year sales growth due to an increase in unit sales and price hikes.

The North America Segment operating income excluding royalty payments to the Japan Segment, which reflects the segment's real profitability, recorded negative year-on-year growth.

The Japan Segment posted an increase both in net sales and operating income.

The Other Segment recorded year-on-year sales growth, but its operating income decreased owing to the Serbia plant start-up costs.